Labour shortage hits small Canadian businesses

Not even wage hikes can save employers from a talent drought

BY Dexter Tilo 10 Dec. 2021

Despite various measures to prevent it, labour shortages are affecting more than half of small businesses, according to a new study, with the pandemic making the situation "more complex." The report from the Canadian Federation of Independent Businesses (CFIB) revealed that 55% of small businesses are not getting the staff they need for current operations - or to meet new demand. An estimated 16% managed to work around the problem, but they incurred significant additional costs.

According to the report, 63% of businesses said they are unable to find employees with the right skillset or experience, while 52% reported there was a lack of available candidates. Simon Gaudreault, CFIB vice-president of national research, added that small businesses were grappling with labour shortages at the beginning of 2020.

"The pandemic has made the situation only more complex," said Gaudreault.

The report said the pandemic disrupted employer-employee relationships and pushed several workers to switch industries.

"Industries that were locked down for long periods of time, like hospitality, have seen a mass exodus as workers upskilled or switched to other jobs, and virtually all sectors are facing major demographic upheavals with not enough new workers coming in to replace those who are retiring," said Gaudreault.

What should HR do?

Majority of businesses affected deployed various means to lure in more staff, including raising wages. However, the CFIB report revealed the success rate of increasing wages for businesses affected is only 31%. As a result, various small business owners have begun using automation and employing temporary foreign workers.

"We're seeing a lot of creative and flexible solutions emerge as a result, but more needs to be done to support them as they face this incredible long-term challenge," said Laure-Anna Bomal, Research Analyst at CFIB and author of the report.

The CFIB made several recommendations to the government to help business owners meet their staffing needs. Such recommendations include:

Improving and streamlining the temporary foreign worker and immigration processes to bring more workers into Canada faster
Stimulating automation through programs or tax credits.
Providing tax relief for workers over 65 who wish to remain employed by making their hours worked tax-free.
Adding tax credits for worker training, particularly for informal, on-the-job training and tax credits for hiring young graduates and students.